Companies find new avenues to drive up sessions as Google's AI Search tools reduce web traffic (GOOG:NASDAQ)

Online publishers and various companies, including IAC's People Inc., report significant traffic declines from Google Search due to its AI-powered tools, with IAC's Google-sourced sessions falling from 52% to 28% and other news sites experiencing similar drops. This shift is compelling affected businesses to adopt new "Google Zero" strategies, diversifying audience acquisition beyond traditional search, as AI directly answers queries, reducing click-through rates. While Google asserts its AI increases search activity and delivers higher-quality clicks, the trend fundamentally alters online traffic dynamics, forcing companies reliant on organic search to re-evaluate their business models and audience engagement strategies.

Analysis

Google's integration of AI-powered search tools is causing a material decline in referral traffic to online publishers, fundamentally altering the digital media landscape. Data from IAC (NASDAQ:IAC) illustrates this shift, with sessions from Google Search on its properties, such as People and Travel + Leisure, plummeting from 52% to just 28% of total traffic. This trend is corroborated by other publishers, including Business Insider, which reported a 55% drop in organic search traffic between April 2022 and April 2025. The core issue is Google's evolution from a 'search engine' to an 'answer engine,' where AI Overviews provide direct responses, reducing the user's need to click through to external sites. In response, affected companies are adopting a 'Google Zero' strategy, aggressively diversifying audience acquisition channels; IAC, for instance, has grown its non-Google sessions at a 29% CAGR by leveraging platforms like Apple News and Instagram. While some businesses like CarGurus (NASDAQ:CARG) believe their model is insulated due to the complex nature of their user journey, the overall risk to page views is widely acknowledged. Google maintains that its AI features have kept total organic click volume stable and improved click quality, but the widespread reports from publishers indicate a significant disruption to established business models reliant on search-driven advertising revenue.

Key Decisions for Investors

• Investors in digital media companies like IAC and The New York Times should critically assess their audience diversification strategies, as the reported 29% CAGR in IAC's non-Google traffic highlights a key metric for measuring resilience against declining search referrals.
• For Alphabet (NASDAQ:GOOGL) investors, it is crucial to monitor the long-term health of its content ecosystem, as sustained traffic reduction for publishers could escalate tensions, potentially leading to regulatory scrutiny or a degradation of the content quality available for its AI models.
• Consider differentiating between online businesses based on their vulnerability to this trend; platforms facilitating complex, high-consideration transactions, as noted by CarGurus, may be more defensible than those monetizing simple, answerable queries via ad impressions.